Equity Indexed Annuities
These annuities have gained popularity in recent years. Clients with equity indexed annuities have been protected from the effects of recent stock market crashes.
Investors in mutual funds and stocks have seen their money evaporate over a very short period of time, experiencing losses of 30-60% or more. Holders of equity indexed annuities, on the other hand, did not lose any money. Many in fact profited during these difficult times.
These annuities are "fixed" annuities and typically guarantee a percentage of the principal investment.
It is unknown at the start of every year how much, if any, interest you will make. With most equity indexed annuities the worst you can do, if the markets are bad, is to earn zero. You cannot lose any of your valuable money due to unpredictable stock market variations.
Many people have benefited from equity indexed annuities, using them as shelters from the volatile storms of stock markets. An equity indexed annuity is not a security. It is, however, a fixed annuity that pays an interest rate based on a crediting method applied to a stock market index such as the S&P 500.
Remember, this is not a short term plan. If you surrender an equity indexed annuity in the early years it is possible that surrender penalties could cause you to lose money and receive back less than you invested.
Many good equity indexed annuities allow you to withdraw 10% of your investment per year free of penalties. Some of them will also allow you to access funds via a check book.
We encourage our clients to make educated and informed choices in order to maximize potential gains. For more information please contact one of our representatives.